AMD announced the deal is valued at around $5.4B USD: $4.2B in cash and 57M shares of AMD common stock (valued at a little over $18 USD per share as of July 21, 2006) will be used to purchase the ATI in a takeover bid. A
little more than half of the cash to be used from the transaction will come
from a $2.5B USD loan from Morgan Stanley, which was the bank quoted Saturday when the
news of this story first broke. This is in addition to the $5.8B USD the company plans
to invest in Dresden, Germany over the next three years and the $3.5B USD
slated for a new semiconductor facility in Luther Forest, New York.
ATI was a fabless semiconductor company, meaning the company relied completely
on third-party facilities to manufacture its ASICs. Although AMD certainly will
have semiconductor fabrication, the company is already hard-pressed to keep up
with CPU demand. AMD President Dirk Meyer emphasized that AMD will not use its in-house facilities for ATI semiconductors at this time, especially with the TSMC and UMC opportunities that are already available.

AMD's press release also claims that the combined company would have had
approximately $7.3B in sales over the last four quarters and just under 15,000
employees. The new company keeps the AMD headquarters in Sunnyvale,
California, and the previous ATI headquarters will act as a business hub for
part of the company. ATI's previous CEO Dave Orton will act as executive
vice president of the ATI division and report directly to Hector Ruiz and Dirk
Meyer. AMD's press release indicates that ATI will, for now, act as a division
of AMD. In the event the takeover falls through, ATI must pay AMD a termination fee of $162M to cover AMD's initial investments and lendings. AMD CEO Hector Ruiz also confirmed that there will not be any significant layoffs as a result of the takeover.

The merger is more than a small shakeup for the industry. NVIDIA, AMD's
number one supplier of core logic for AMD platforms, is also a direct
competitor of ATI for discrete and integrated graphics. Jaffar Ali was
able to reach NVIDIA's Director of Product PR EMEA, Luciano Alibrandi, who claims
"Our PC strategy is to be the leading innovator of GPU and core logic for
both Intel and AMD platforms. GeForce is the #1 GPU brand. Quadro is the #1
professional and workstation graphics brand. nForce the #1 core logic brand.
And SLI is the #1 multi-GPU brand. They are specifically sought out by end
users of both Intel and AMD processors. Today's announcement only enhances our
strategy." It appears definite that NVIDIA will approach the Intel
market with much more vigor than in the past, though no NVIDIA representatives
would comment on whether or not the merger will result in a scaling back of
NVIDIA AMD components. AMD President Dirk Meyer added "With regard to GPUs: I fully expect ATI's solutions to compete with NVIDIAs on the AMD platform."

Microsoft had already voiced its opinion in the AMD press release when Jim Allchin, Co-President of Microsoft’s Platforms and Services Division, claimed "We're excited by the potential of what AMD and ATI can deliver together to enhance the Windows Vista experience for our customers even further." Since it may take years for the AMD takeover to really kick into effect, it may take some time for customer-ready products to hit store shelves.

The addition of in-house core-logic also strengthens AMD's presence in the
server market. A portfolio manager for AMD, who wishes to remain nameless
for now, told DailyTech "[I] doubt AMD will have the price flexibility to
bundle ATI chipsets (18% gross margin) until they bring the manufacturing
in-house. Available capacity for that is still down the road." The
same manager went on to claim that without total reliance on Broadcom for
server core-logic the company will have much better success securing major
deals for large quantities of server products. All of these products will now be obtained
through the single AMD channel instead of multiple vendors -- the company previously prided itself in diversification of channel solutions until the Dell picked up AMD to provide server products.

1.) Intel chipsets allowed ATI's crossfire but not nVidia's SLI.
2.) nVidia and AMD have been very good to each other so far.
3.) With Vista coming up, Intel has a huge opportunity to cash in on the (very huge) integrated graphics market by coming up with a 3D-accelerated DirectX9-compatible integrated graphics controller - this is definitely not beyond them.
4.) AMD opening up their HTX to third-party vendors to create "accelerators".

Interesting to see where everyone goes now with this. Intel has had the upper hand over AMD when it comes to chipsets. Maybe things will change now with AMD leveraging ATI's expertise. Maybe I'm too naive, but what's the benefit for ATI in this deal?

nVidia is probably too big to be taken over by AMD, but Intel definitely can I think, should they wish to. However, nVidia probably has its own designs.

actually Nvidia is smaller then ATi (because of ATi's more successful forays into the mobile graphics sector), so there really is no reason to buy ATi over Nvidia.... strange they would take this action though.

I think most of the GPUs from ATI are the cheap integrated ones in either mobile devices or built into motherboards. Which is good for market share, but apparently not so good for overall revenues. I wonder what the actual profit margins are like for the two companies.

ATI makes a lot of inexpensive, onboard-class solutions, nvidia makes a lot of inexpensive, mid range and high end solutions. The profit margin on mid-to-high-end products is greater, hence more profit. ATI still holds more market share, just not as much revenue.

quote:I think most of the GPUs from ATI are the cheap integrated ones in either mobile devices or built into motherboards. Which is good for market share, but apparently not so good for overall revenues. I wonder what the actual profit margins are like for the two companies.

I think this makes sense. It might be a small market in terms of revenues but now I think AMD has a big opportunity to cash in on the new DX10-accelerated GPU demand in the graphics-integrated chipset market. Once you get your toe in, you can always barge your way through, I guess. Not a bad strategy in my book.

Market Cap: The market price of an entire company, calculated by multiplying the number of shares outstanding by the price per share. here also called market cap or market capitalization.

As anyone who remembers the .com days, right before the bubble burst, market cap is hardly a reliable indicator of a company's size. I do agree that nVidia is the larger company but not because of market caps. I think a better indication of a company's worth is the total value of it's intellectual properties as well as it's revenues and profits.

Nope. I'm not including stocks in there. We all know stocks can be vastly inflated and be worth way more than what the revenues as well as the intellectual properties are worth. Which is why I say the market cap is a bad indicator of a companies net worth. Market cap is partially based on the predictions of how a company will do which as we all know in reality can be much much much much different from the fantasy land that some investors live in. Just ask the .com investors.

Maybe I'm just wording it wrong. I just feel that including stocks in a companies net worth is not that reliable due to the inflation of some stocks beyond what would be reasonable considering what the company makes. I'm probably thinking more in the lines of net assets (since it's a company) with an outlook on how the company is doing by looking at it's revenues and profits.

CCC sucks and is a memory hog. Please go back to supporting the regular display panel!

So now we will be forced to buy ATI cards for any AMD mainboard? Especially to operate "properly"?

This sucks big time. Now it's time for another contender to enter the market, like [b]3DFX[/b] did in the past! I do not like mergers and particularly this one IS very odd! As much as I like AMD and ATI, I'd rather have them as seperately owned legal entitys! This is just as bad as [b]Electronic Arts[/b] buying out all the small game development houses!

P.S.
What is [b]Dell[/b] going to do now about embedded graphics? Intel only? Dell has been using ATI and Intel graphics chips in servers.

"Canadians tend to sell out. Arent they still owned by the United Kingdom and the Queen?"

Are you *trying* to start a flame war? Such a blanket statement shows how incredibly ignorant and uneducated you are. I would have to guess that either you're a teenager, or a very young, and immature adult. What's your next statement, all Mexicans are lazy?

"Are you *trying* to start a flame war? Such a blanket statement shows how incredibly ignorant and uneducated you are. I would have to guess that either you're a teenager, or a very young, and immature adult. What's your next statement, all Mexicans are lazy?"

Dude, it's a joke. laugh and chuckle at yourself, we're talking about a country that has someone else's queen on their money.

And by the way, who's starting the flame war here? You;re the dude with their undies in a bunch.

I agree with this. ATI can't even properly implement simple 1:1 pixel scaling on LCDs in their drivers, while Nvidia has had this feature working fine since they introduced it, and that is the main reason I don't buy ATI video cards.

This is going to be really interesting for nVidia. I would think that nVidia would not desired AMD ( and its ATI ) to have some of its secrets, so this likely means less action between nVidia and AMD - which will primary hurt them in the nForce motherboards.

As far Intel is concern, it would probably be best to talk to nVidia and improve relations between the two companies.

Maybe there will be a nForce Pro chipset for the Woodcrest coming soom.

Yeah, I'm predicting a "strategic alliance" at the *least* among Intel & NV in order to counter this development.

I agree that an Intel-NV buyout is questionable due to anti-trust concerns as well as significant duplication of resources among Intel & NV - they do so many of the same things, it would probably result in lots of layoffs if they did actually do a buyout. That said, a strategic partnership makes a lot of sense...

AMD is behind Intel in the chipset/GPU area, mainly because AMD just doesn't make them at all. AMD is taking a significant step into the chipset/GPU market by acquiring ATI. AMD also now has an in-road to MS, Sony and Nintendo via ATI's previous console dealings.

ATI stands to gain a lot by this, too. ATI can't produce their own chips - they will be able to in the future when AMD gets all their fabs built. Also, ATI will get some insane investment capital. The entire company of ATI just sold for 5.4B, but it's no problem for AMD to drop that much on a new fab. AMD can easily just pump in a billion to ATI R&D or something along the lines - AMD has the cash for that, ATI didn't.

I think the issue is that AMD doesn't have the cash for that. They needed alot of incentives to build a new Fab in New York. They had to take out a substancial loan of 2.5B USD to acquire ATI. ATI and AMD have been in a bit of a slump for the past few months. Their revenues are down, and with Intel rolling out its Core 2 Duo, as well as a very agressive roadmap, AMD is just starting into some rough waters. With some luck ATI will be a large revenue generator and will help to ease the burdeon that Intel is going to put on AMD in the CPU arena for the next few years. This all depends on the fact that nVidia doesn't One up ATI in the graphics market, which could very easily happen.

Geode was not sold. The division was moved over to the embedded opterons. They are still selling the chips. The Alchemy(MIPS) proccessors were sold though. I doubt either move has anything to do with the ATI aquisition as there is plenty of competition in the embedded markets of which ATI does not compete in.

My main problem is that Ive been an AMD/nVidia guy for 7 years. My world has been turned upside down. For the time being, I think I have to go with an Intel Core 2 6600, or cheapy 6300. Ill go AMD/ATI in 2008 or 9 when they get their shit together and show me the baddest assed hardware Ive ever seen (and they have the resources to do that now too...). Quite frankly I just want a fast computer and anything is faster than what I currently have. A Core2 6300 is about 4 times faster than my rig.

Agreed. I've been on the Intel/ATI line for a long time myself. I've already ordered a new mobo for the Core 2.
ASUS P5W DH Deluxe.
I'll order the 6600 Core 2 Duo when I see it up there.
For now I'll keep using my X1900XTX.
In the future, Guess I'll be migrating over to nVidia/Intel, and as always Corsair RAM :P

Don't cry for NVidia. Their NForce3 drivers for XP x64 are still in beta and over a year old. And they have a major unfixed bug for SATA drives. Because of NVidia's blatant lack of care for older products, I was never going to buy or recommend an NVidia chipset ever again.

If i had the energy to go down to a brokerage, I would invest some money in this company now! AMD dropped the price of their stock in order to use some of those investment assets to make a purchase. That stock price is going up unless the company totally tanks...doubtful.

Fewer choices for the consumer is all I see out of this. I guess things were going in that direction anyway, but this really solidifies it. There may be some token offerings where you can mix and match Intel\ATI or AMD\nVidia but we can all see where it's headed.

OMG! I thought the Hatfields and McCoys were some serious inlaw fighting. Body blow! Body blow! Those crazy Canadians sure laid a low blow to Intel. I thought for sure it would have been the other way around. I guess Nvidia felt their company was worth more than $5.4B US. Well..AMD's loss is my gain. AMD/ATI hit the market low, Sony/Nvidia hit the market high (once the Cell arrives on the scene) and Intel somewhere in the middle. Everyone grab your gats, shits about ot pop off.

"This is from the DailyTech.com. It's a science website." -- Rush Limbaugh